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This article presents several research papers related to banks and asset markets during war and depression. "The Great Banks' Depression: Deposit Withdrawals in the German Crisis of 1931," uses monthly balance-sheet data of all major German credit banks, and further analyze deposit withdrawals and bank failures in the German banking and currency crisis of 1931. "International Financial Crisis Contagion in the Interwar Period," examines international financial markets and the links between them using a newly hand-collected data set for more than 300 company stocks, encompassing weekly equity-market observations for 13 countries.

The article presents abstracts of research related to economic history. These include "Ecological Frontiers on the Grasslands of Kansas: Changes in Farm Scale and Crop Diversity," "Institutional Innovation and the Creation of Liquid Financial Markets: The Case of the American Over-the-Counter Market," and "Geographic and Regulatory Frontiers in Commercial Banking: Private Banking in the United States, Scotland and Germany in Early Industrialization."

Explores how the banks chartered by states in the United States (U.S.) provide a source of flexibility in state public finance following the decision of the U.S. Constitution to remove the states' power to issue paper money. Role of investment earnings and tax revenues derived from banks in state public finance; Importance of state-bank relationships to public finance.

Empirical studies and much marketplace opinion have it that the spread between private money market rates and the U.S. Treasury bill rate of comparable maturity is due to differential default risk, liquidity risk, and relative supplies. This paper presents an argument and empirical evidence that the bulk of the systematic and medium-term differential between privates rates---in this case, domestic CDs, commercial paper, bankers' acceptances, and Eurodollar CDs---and the T-bill rate is due to the exemption of interest on Treasury securities from state and local taxation. In the case of Eurodollar CDs, the additional and major systematic factor explaining the spread (visa vis T-bills) is the exemption of Eurodollar CDs from the Federal Reserve's "tax" via reserve requirements. An empirical section confirms the role of standard default risk, liquidity risk, and market "absorption" variables in determining short-term deviations from tax-adjusted parity. The tax-adjusted parity condition, however, remains the major systematic and medium-term determinant---certainly more important than has been suggested previously in the literature. [ABSTRACT FROM AUTHOR]

Comments on an article about private banking in the United States. Discussion on the work of economist Herman Kross; Details of economic history; Perception on the role of private bankers.

Comments on articles about economic and business history in the United States. Details of private banking; Views on capital accumulation.

This article presents a comment on the paper "Deposit Insurance in the United States -- Evaluation and Reform." The author discusses some of the proposals that are presented in the paper and offers suggestions related to these policy measures. Some of the concerns that are raised by the author include the complexity of risk assessment and the responsibilities that the Federal Deposit Insurance Corporation and the U.S. Federal Reserve are given in the paper. The author discusses bank failure and the role that large investors play in the success of small banks. The author also offers some policy suggestions of his own.

A conference paper is presented that examines the distribution of bank deposits in the U.S. and the implications this has for the flow of funds analysis. A study was conducted in southern California in an attempt to examine how the funds from this region moved throughout the surrounding area. The author was interested in examining the validity of the growth center concept. The author's findings support the idea of a funds flow; however, he suggests that further analysis is needed.

A central question of many previous monetary studies has been the determination of the effects of various forces upon the actual supply of money in the economy. One of a number of competing monetary supply hypotheses (Brunner and Meltzer) has focused on the relationship between bank reserves and deposit creation. This theoretical structure was first suggested in earlier works by Phillips and Crick. Recent studies of similar nature, including those of Mellon and Orr, Morrison, and Brown and Lloyd, have employed the techniques of inventory theory to examine the factors influencing bank credit expansion. Similar inventory treatments of other cash balance and portfolio adjustment models are presented in the works of Baumol, Eppen and Fama, Lloyd, and Chitre. In the present paper, the effects of various forces on the optimal expansion of credit and the holding of reserves are investigated using the techniques of dynamic programming (see, for example, Bellman and Dreyfus). Discussed in the paper are the effects on bank credit expansion of uncertainty about reserve losses, various types of penalty costs, costs of adjustment, uncertain future interest rates, and of various institutional structures under which the bank must operate. This latter topic is important because of the Federal Reserve policy change of September 1968. Prior to that time, required reserves and actual reserves were computed over the same reserve period. Since that time, however, the required reserves in any period are known with certainty at the beginning of the period and depend upon deposit levels two periods earlier. For purposes of mathematical convenience, this latter structure is treated here as a one-period lag. [ABSTRACT FROM AUTHOR]

The interdependence of loan cost and tangible bank activity is an aspect of the cost of bank debt that has not been treated in the literature. Understanding this interdependence is important for banks in pricing their services, especially as banks adopt more flexible pricing policies. This understanding is crucial for a firm in establishing the true cost of bank borrowing, in comparing bank borrowing with other sources of funds, and in evaluating the firm's banks. It is also important for understanding the firm-bank relationship in general and the cost of capital in particular. This paper investigates this interdependence and determines the effective cost of bank borrowing as a function of useful loan size when banks: (1) impose compensating balance restrictions in addition to interest charges in obtaining compensation for loans, (2) allow the firm to earn credits on average net collected balances in the firm's account that can be applied to payment for tangible bank services, (3) allow the same balances that earn credits for tangible services to be used to satisfy the compensating balance requirements associated with borrowing, and (4) impose constraints on the percentage of charges for tangible services that can be paid for by cash payments. Conditions 1 to 4 and the necessity of providing for transaction balances are typical of most firms. This paper (1) defines the concept of both the effective interest rate and the effective rate of compensating balances, and (2) derives the effective cost of bank borrowing as a function of useful loan size at a given bank. We find that the marginal effective loan cost versus useful loan size is a step function of three steps at a single bank and is a step function of many steps for a firm with many banks. [ABSTRACT FROM AUTHOR]

Commercial bank portfolio models developed by Hester [6], Porter [11], and Kane and Malkiel [7], among others, relate the structure of an asset portfolio to variation in the level of deposits. Similarly, in a recent application of linear programming to asset management, Cohen and Hammer [3] specify a liquidity constraint based upon deposit fluctuations. However, there have been few empirical studies of the determinants of demand deposit fluctuations. The purpose of this paper is to extend the work of Gramley [4], Rangarajan [12], and Wilkerson [14] on the determinants of deposit variability. In this paper, the analysis will be confined to demand deposit variability. [ABSTRACT FROM AUTHOR]

This article presents several research papers related to economic history. "Educational Disparity in Pakistan, 1947-1971." Using time-series data, this paper documents the regional divide in educational facilities between East Pakistan (now Bangladesh) and West Pakistan, 1947-1971. "Management Structure and Bank Performance: Empirical Examination of the Chinese Banking Industry," investigates the relationship between bank performance and management structure in Shanghai between 1912 and 1937. The data come from Shanghai's Municipal Archives and the Center for Research of Chinese Business History.

This paper examines the effect of commercial bank entry on underwriting spreads for IPOs, SEOs, and debt issues using a long time series that spans 30 years, from 1975 to 2004. We find that, on average, commercial banks charge lower spreads of approximately 72 basis points for IPOs, 43 basis points for SEOs, and 14 basis points for debt over the entire sample period. The economic impact of commercial banks on lowering underwriting spreads is most significant when commercial banks were allowed to enter via Section 20 subsidiaries but persists beyond. Commercial bank entry into underwriting appears to have a procompetitive effect that lasts many years after their initial entry. [ABSTRACT FROM AUTHOR]

Presents an abstract of a research paper entitled `Bank-Firm Relationships and the Development of Interlocking Directorates in the Kaiserreich,' by Caroline Fohlin, presented at the annual meeting of the Economic History Association.

The article discusses the evaluation of bank performance and comments on the paper, "A Canonical Analysis of Bank Performance" by Donald R. Fraser, Wallace Phillips Jr., and Peter S. Rose. The author reports on the statistical aspects of the multivariate canonical analysis conducted by Fraser and his colleagues. The canonical analysis reduces the problematic dimensions of examining the relationship between the components of performance and determinants in commercial banks in Texas. Also, the correlation coefficients have their variances kept constant through this analysis.

There have been many efforts in recent years to explain differences in the performance of commercial banks. Interest has centered on the extent to which changes in a selected group of indices of bank performance are related to tile structure of bankinq markets and selected other factors thought to influence bank behavior. While various tecnniques have been used, the most common has been multiple linear regression. The measures of performance entered into the regression equations have included the price and quantity of bank services and bank profitability, while the explanatory variables have included, to name only a few, the one-, two-, or three-bank concentration ratio, the number of banks in the market, the existence of competition from nonbank financial institutions, bank costs, bank size, and proxies for the demand for banking services. Generalizations then have been made about the impact of market structure and other variables on bank performance, generalizations based upon the regression coefficients of the explanatory variables. The consensus appears to be that the demand for banking services and bank costs are significant determinants of the performance of individual commercial banks; market structure appears to be much less important. However, the conclusions are by no means unanimous. Numerous conceptual and data problems are common to these studies. Not the least of these limitations is the isolated treatment of each of the performance variables. In fact, the performance of commercial banks should not be measured by a single proxy variable, such as the loan rate or bank profits, but by a set of variables which are jointly determined by market structure, demand, and other factors. The specification of the model should not rest upon a single measure of bank performance (as in the regression studies cited above) but should be multivariate (for example, a set of simultaneous equations). The purpose of this paper is to report the results of the... [ABSTRACT FROM AUTHOR]

The article presents commentary on the reports "Risk, Return and the Morphology of Commercial Banking," by John T. Emery and "The Pricing of Bank Deposits: A Theoretical and Empirical Analysis," by Michael A. Klein and Neil B. Murphy, both included within the issue. Both models of systematically describing banking market and firm behavior are complimented and contrasted with each other, particularly in regards to the use of rent and portfolio theories.

This paper surveys the recent academic literature on the economics of cross-border regulatory cooperation as well as recent policy developments in this area. While institutional arrangements of cross-border regulatory cooperation used to focus on day-to-day supervisory tasks, the crisis has given an impetus to a focus on cooperation at the bank resolution stage, with an array of different cooperation forms. A growing theoretical literature has documented different externalities arising from national supervision of cross-border banks, while empirical evidence has been relatively scarce. The paper concludes with a forward looking agenda both for policy reform and academic research in this area. [ABSTRACT FROM AUTHOR]

Argues that changes in the regulatory environment help greatly to explain the movements in circulation and increased bank entry. The reduction in circulation can be traced to an 1882 change in the law that allowed banks to divest their bond holdings; A model linking regulation and national bank note issue; The market for real paper money; Empirical tests; Conclusion.

The paper discusses the effects on growth of a systemic banking crisis as a result of debt defaults. These effects will come from the impact of credit rationing on consumption and credit and from the impacts of a significant rise in the spread between lending and borrowing rates for both producers and consumers. The analysis uses the dynamic stochastic general equilibrium version of the National Institute global model. The paper also investigates the impact on output of a permanent, regulation induced, rise in margins in the financial sector, taking into account the impacts of regulation on equity market valuations. [ABSTRACT FROM AUTHOR]

The current financial crisis has raised queries about the adequacy of the present regulatory regime. Whilst the immediate priority may be to plug the obvious holes in the system, there are some long-term generic problems with almost any system of financial regulation. This paper explores one such concern, i.e. the boundary problem. This arises because effective regulation, one that actually bites, is likely to penalise those within the regulated sector, relative to those just outside, causing substitution flows towards the unregulated. This boundary problem impacts on many proposals, such as 'narrow banking' and my own, with Avinash Persaud, for state and time-varying capital adequacy requirements. The question of how and where to set the boundary is considered. Such boundaries will always be criticised as leading to disintermediation, competitive inequality (no level-playing-field), inefficiency and higher spreads and borrowing rates; and such criticisms will be valid up to a point. The paper ends by discussing how best to respond. [ABSTRACT FROM AUTHOR]

The financial crisis that started in August 2008 has reached a climax in the autumn of 2008 with a wave of bank nationalisations across North America and Europe. Although banking crises are not uncommon, this is the largest since 1929-33. This paper discusses the build-up to the crisis, looking at the role of low real interest rates in stimulating an asset price bubble. That bubble was stocked by financial innovation and increases in lending. New financial products were not stress tested and have failed in the downturn. After discussing the bubbles we look at the collapse of the complex asset structure, and then put the crisis in the context of the literature. The paper concludes with a discussion of policy implications of the crisis, and advocates a significant improvement in the regulatory structure. [ABSTRACT FROM AUTHOR]

In this paper the co-responsibility of the North for the development of the South, the chance of an authentic development and Rawls's maximin rule are indicated as the ethical perspectives from which the financial integration of developing countries will be evaluated. It follows a brief economic analysis of possible problems of high inflows of portfolio investments for developing countries. They become more vulnerable to financial and monetary crises and their domestic banking systems are weakened by a higher risk of devaluation. This will lead to an outline of the goals for reshaping the financial integration: among others limitation of capital inflows, strengthening of the domestic banking system and further development of the country's particular economic style. Finally some regulations of external financial relations and the proposal of a cooperative monetary arrangement between the South and the North are discussed as possible measures to improve this integration. [ABSTRACT FROM AUTHOR]

The paper examines the determinants of contract terms on bank revolving credit agreements (revolvers) of medium/large publicly traded companies. We model the duration (maturity), secured status, and pricing decisions within a simultaneous decision framework, thereby overcoming the biased and inconsistent estimates in prior single equation studies of debt contract terms. We find strong interrelationships between contract terms with significant bi-directional relationships between duration and secured status and between the all-in-spread and commitment fees and a unidirectional relationship from both duration and secured status to all-in-spread. We also illustrate how several single equation studies of contract terms draw incorrect conclusions because of their (inappropriate) assumption that other contract terms and leverage were exogenous. Finally, our results support the hypothesis that the setting of contract terms plays an important role in alleviating contracting problems. [ABSTRACT FROM AUTHOR]

This paper reviews the market failures that may justify the need for liquidity regulation, assesses whether liquidity regulation is a necessary complement to Lender of Last Resort (LOLR) policies, capital regulation and prompt corrective action, surveys the available evidence on the net benefits of liquidity regulation, and concludes by outlining research directions useful to improve bank regulation design. [ABSTRACT FROM AUTHOR]

In all the criticisms that have shadowed the financial industry in recent years, the burden seems to be, that the reckless (as opposed to malicious) bankers too often took money of which they were the appointed stewards, and used it for speculation, especially in junk bonds. As Shaheen Borna and James Lowry argue in their "Gambling and Speculation" (the only article on gambling that I was able to raise on my computer) business speculation is probably wrong, since it is very like gambling, which everyone knows is wrong. But why is gambling wrong? If we, as the ethicists of business, are to adopt an uncharacteristically judgmental posture toward the most venerable American institutions, occupying the tallest and closest of American buildings, by calling their residents "gamblers," then surely we ought to be able to provide an account of the blameworthiness of gambling itself. That, at any rate, is the challenge I set myself for this paper. [ABSTRACT FROM AUTHOR]

This paper examines the associations between the adoption of a short-term compensation contract and changes in executive expenditure decisions for a sample of major commercial banks. In particular, the analysis concentrates primarily on changes in executive expenditures on discretionary items (expenditures preferred more by the manager than by shareholders). The results indicate that the adoption of a short-term compensation plan is associated with modest decreases in the ratio of discretionary expenditures to current operating revenue and the ratio of discretionary expenditures to managerial compensation for banks making the contractual change. These results are consistent with the conclusion that the mix of discretionary expenditures and effort selected by the manager changes with the adoption of a short-term compensation contract. [ABSTRACT FROM AUTHOR]

The article reports on the pricing of bank services through analysis of the market for loan commitments as well as the pricing of other bank services. Also, the role of compensating balance requirements associated with loan commitments is looked at. The bank, when providing a loan commitment, specifies an amount that it will lend up to and gives a fixed rate or an interest rate which is tied to the prime rate with a predetermined formula. They then charge a price or premium which is a reflection of the estimated expected cost of providing that loan commitment which relates to the customer's credit quality and the timing of the borrowing.

This paper has developed a model of hank margins or spreads in which tile bank is viewed as a risk-averse dealer. It was demonstrated that an interest spread or margin would always exist, and that this was the result of transactions uncertainty faced by the bank. Moreover, it was shown that this pure spread depended on four factors: the degree of managerial risk aversion; the size of transactions undertaken by the bank; bank market structure; and the variance of interest rates. The model implied that liability and asset structures had to he analyzed together since they were directly interrelated through transactions uncertainty. It was shown that because of this transactions uncertainty, hedging behavior was perfectly rational within an expected utility maximizing framework. Extending the model from a structure with one kind of loan and deposit to loans and deposits with many maturities should lead to further interesting insights into margin determination especially as "portfolio" effects may become apparent. In the empirical section, tests were undertaken using data from a sample of U.S. commercial banks. It was shown, given certain reasonable assumptions, that tho pure spread could be empirically identified. It was found that this spread was positively and significantly related to the variance in the tale on Sends as predicted by the theoretical model. It was also inferred that the asset (liability) maturity, or duration, of major concern to this group of banks was one year. When the sample was split into two subgroups (measured by asset size), it was found that the smaller banks had an average transactions spread of approximately one-third of one percent more than the larger banks. While this difference was small, it appeared to be statistically significant. Statistical tests were then conducted to see which factors explained this difference. It was tentatively concluded that the difference was largely due to market structure factors which allowed the... [ABSTRACT FROM AUTHOR]

The article presents an econometric analysis of the stochastic processes involved within assessing interest rate risk within bank capital management. Existing structures of bank management are described, pointing out the inevitable presence of interest rate spread risk. Mathematical analysis within the efficient market theory paradigm is presented in order to determine variances in short and long-rate interactions of bank interest rates and improve interest forecasting methods. Comparisons are also given between the presented model and alternative forecasting processes such as the random walk model.

The article focuses on the trend of large banks failing, primarily in greater numbers since 1965, 30 years after the establishment of the Federal Deposit Insurance Corporation (FDIC). The widespread failure of large banks is a result of trends in the U.S. banking system since the early 1960s. Many banks began to strive for a rapid increase in assets, deposits, and income. The situation grew stronger during the tenure of James Saxson as Comptroller of the Currency. This paper attempts to examine the problem of large bank failure and to determine whether this problem needs to modify bank supervision and deposit insurance methods. Examined are the policies and procedures regarding small bank failure. The last section discusses possible solutions to this crisis.

The use of computerized financial statement simulators in financial planning has become widespread, particularly for long-range planning. Most large firms have some form of financial statement simulator, although there appears to be wide variation among firms in their sophistication, degree of use, and acceptance by management. [ABSTRACT FROM AUTHOR]

In several recent studies scale economies in the operations of commercial banking have been detected, assuming that expansion takes place with a fixed number of plants [1, 2, and 3]. The data for these studies were available for the periods 1959-1961 and 1963-1965 in one region of the United States. The purpose of this paper is to reestimate similar functions for an expanded sample covering virtually the entire United States for the year 1968. in this way, the results of earlier studies may be checked for generality, and the effect of time on the results may be investigated. In Section II, the model is described. The data and empirical results are presented in Section III. Section IV is a summary and conclusion. [ABSTRACT FROM AUTHOR]

A substantial amount of scholarly effort in recent years has been devoted to the determination of the relationship between banking structure and performance. In general, the results of these studies indicate that banking structure affects both the price and quantity of banking services, but, for practical policy purposes, the impact of banking structure is quite small. Yet, the results of these studies have been inconclusive and contradictory to a substantial degree. This paper has two basic objectives; first, to test with a new and somewhat more refined sample several major hypotheses concerning the impact of banking structure on bank performance as outlined in the studies of Edwards, et al. As Kaufman pointed out in his regression study of Iowa banks, "the experiment should be replicated for other states and other types of bank organizations before the results may be considered sufficiently persuasive for determining policy." Second, extending the analysis beyond mere duplication of previous studies with different data, there seemed to be the possibility of improving upon. the methodology frequently employed in previous research, especially in reducing the possibility of regional bias, in introducing new variables, and in more carefully delineating the appropriate market area. [ABSTRACT FROM AUTHOR]

The results of our tests indicate that branching does tend to reduce variability within a metropolitan area. Given the data with which we worked, no conclusive statement can be made concerning the relationship of geographical dispersion to diversification of deposits. In this paper we have measured the impact of branching on deposit variability for one financial institution and for one type of deposit. Thus, our results should be viewed as a first step in studying this question. If data become available, further replication for different areas and different types of deposits, especially demand deposits, should be undertaken. [ABSTRACT FROM AUTHOR]

Risk-sensitive capital requirements, such as those established in Basel 2/3, and loan loss provisions based on incurred losses or on short-horizon expected losses, increase procyclicality in the banking system. They could, therefore, contribute to fuelling credit bubbles in good times, as rising risks are not properly covered either with capital or provisions, and credit crunches in bad times, as requirements are sharply increased to compensate for the former undercapitalisation and under-provisioning, and banks respond by cutting credit to households and firms. This paper shows that the procyclicality of current and envisaged capital requirements and loan loss provisions is a serious concern. But, at the same time, it can be dealt with using countercyclical macroprudential tools, first, by smoothing minimum capital requirements using a very simple and intuitive formula based on GDP growth and, secondly, by using forward-looking provisions such as the Spanish dynamic provisions, a working macroprudential mechanism for more than a decade and a full lending cycle. [ABSTRACT FROM AUTHOR]

A conference paper is presented that examines the control of savings and loan associations. The author discusses the growth of the savings and loan industry in the U.S. and how this growth has centered around mutual associations. The author examines the voting practices of mutual associations and the preliminary results of a survey that was issued to various executives of these organizations.

‘Too big to fail’ traditionally refers to a bank that is perceived to generate unacceptable risk to the banking system and indirectly to the economy as a whole if it were to default and be unable to fulfill its obligations. Such a bank generally has substantial liabilities to other banks through the payment system and other financial links, which can be sources of ‘contagion’ if a bank fails. The main objectives in this paper are to identify the different dimensions of too big to fail and evaluate various proposed reforms for dealing with this problem. In addition, we document the various dimensions of size and complexity, which may contribute to or reduce a bank's systemic risk. Furthermore, we provide an assessment of economic and political factors shaping the future of too big to fail. [ABSTRACT FROM AUTHOR]

Using a large loan sample from 1990 to 2006, we examine why firms form new banking relationships. Small public firms that do not have existing relationships with large banks are more likely to form new banking relationships. On average, firms obtain higher loan amounts when they form new banking relationships, while small firms also experience an increase in sales growth, capital expenditure, leverage, analyst coverage, and public debt issuance subsequently. Our findings suggest that firms form new banking relationships to expand their access to credit and capital market services, and highlight an important cost of exclusive banking relationships. [ABSTRACT FROM PUBLISHER]

In 1686 the leadership of Massachusetts became involved in the first operational bank scheme in America. In 1688 this note-issuing bank was mysteriously aborted at an advanced stage. I suggest a new, simple explanation for the bank's demise. The bank's notes were supposed to be backed mostly by private land in Massachusetts, but a new royal governor invalidated all the land titles. This episode demonstrates the importance of clearly defined and enforced property rights for the development of financial institutions. [ABSTRACT FROM PUBLISHER]

The article explores how bank regulators in the United States can pursue optimal policies to regulate bank capital under the existing banking laws. The authors use existing market models, the linear effect of leverage on beta, and approximation theories to create a "bench mark" model to be used by regulators to determine strategies about specific bank situations. The article also presents a discussion of the funding of U.S. bank regulatory agencies such as the Federal Deposit Insurance Corporation (FDIC), policies regarding both assets and capital, and matters of scale regarding the possibility of bank failures.

The objective of this study is to determine the impact of money market conditions and a bank's regulatory environment on the interest rates banks charge on their loans. This is accomplished through the analysis of the effect of these impacts, in a multiperiod framework, on a bank's optimal investment and borrowing decisions and the minimum required rate of return on its asset portfolio. [ABSTRACT FROM AUTHOR]

The article focuses on a normative approach to bank capital adequacy. This article provides a model that avoids the reliance on arbitrary cut-off ratios. Instead, the model utilizes finance theory and formal probabilistic considerations in order to provide a testable theory of bank risk and to derive a comprehensive expression for bank capital adequacy. The article focuses on the sensitivity of the bank's sources and uses of funds to several different factors as the major determinant of capital adequacy.

The article addresses the question of whether or not those states with branch banking have more banking offices per person that those states with unit banks. A study is performed using cluster analysis in metropolitan areas. The article discusses the methodology, the evidence from the clusters, and conclusions and policy implications. The analysis found that, in general, there are more banks per person in branch banking states than in unit banking states. The author acknowledges that issues other than convenience are at play here, and that a study of rural areas may prove different results. The significance of this study in light of U.S. Senate Banking Committee hearings and public policy over optimum banking structures are discussed.

The article discusses registered bank holding company acquisitions and provides a cross-section analysis of them. The authors state that a great amount of scholarly study has been focused on the field of banking structure. They explain that there have been a number of studies of banking costs under differing market structures with the aim of defining an economically "optimal" banking structure. They say that another vital body of research has been focused on identifying the impact of given market structures on performance variables.

This paper explores the impact of internationalization on the financial services policy subsystem in Canada. It uses subsystem adjustment as a concept to bring some analytical clarity to how exogenous factors like globalization and international crises may impact existing policy regimes. Based on examination of globalization-induced banking deregulation (1987?1991) and the current crisis of securitized banking, the paper argues that the strength of this approach is that it integrates endogenous effects of the existing subsystem in explaining policy changes in response to what are normally treated as exogenous shocks. Careful effort needs to be made to differentiate the processes of external systemic perturbations from subsystem spillovers as these two processes of adjustment and policy change can lead to different policy making dynamics over the long term. [ABSTRACT FROM AUTHOR]

The article presents a comment on the paper on "The German Twin Crisis of 1931" by Isabel Schnabel, published in the current issue of "The Journal of Economic History." It is lovely to see attention to this critical episode in the Great Depression. Schnabel repeats the familiar argument that bank behavior was a primary cause of the German crisis. The crisis clearly began as a currency crisis, not a banking crisis. The purpose of this comment is to examine the data that Schnabel's article brings to bear on this question and evaluate the evidence it presents in support of its hypothesis.

The article presents a banking firm model which extends previous research on local bank market structure and impacts on its performance, incorporating market structure, competition, and bank demand deposit pricing policies. Questions are also raised regarding the significance of regulatory restrictions on the model. Empirical support is also provided, highlighting the problem of zero explicit yield restrictions on demand deposits.

The article presents an investigation into the impact of cost of equity capital on commercial bank fund structures. Questions are raised regarding the possibility of an optimal design for the balance between earnings maximization and cost minimization. Additional considerations are also given to the influence of dividend policies on bank capital costs. The conceptual and empirical context for the research is outlined. Conclusions are offered regarding the usefulness of unified capital factor equation combinations and the inconclusivity of market sensitivity to bank capital structures.

The article focuses on the development of a banking portfolio selection model that examines the variability of gross asset levels and income as banking risks. It states that the handling of liquidity constraints is the primary benefit of using chance-constrained programming. It mentions that there was a lack of data concerning transaction costs which led to the assumption that real estate and consumer loans were completely illiquid and conversely that securities would be completely liquid. It states a further assumption would be that if the assets were liquidated during this period, the coupon on securities would not be obtained.